Clothing Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 35,000 clothing retailers in the US generate revenue by selling a variety of apparel and apparel-related products to consumers. Clothing stores sell primarily new clothing, and may specialize in a particular category, such as men, women, children, infants, families, or accessories. Family clothing stores account for 57% of industry sales. Women’s clothing stores are 19%; other specialty stores are 20%, and men’s clothing stores are 4%.

Seasonality of Demand

Most clothing stores experience major seasonal fluctuations during the winter holiday and back-to-school periods.

Trends and Fads Rapidly Change

The clothing industry is in a constant state of change, driven by fashion trends and fads.

Industry size & Structure

The average clothing retailer employs fewer than 25 workers and generates $5-6 million annually.

    • The clothing retail industry consists of about 35,000 companies that employ 851,300 workers and generate about $216 billion annually.
    • Family clothing stores account for 57% of industry sales. Women's clothing stores are 19%; other specialty stores are 20%, and men's clothing stores are 4%.
    • The industry is concentrated at the top, and highly fragmented at the bottom. The top 20 firms account for 55% of industry sales.
    • The average independent clothing retailer operates out of a single location, employs fewer than 10 workers, and generates between $300,000 and $900,000 annually.
    • The industry includes national chains, regional chains, and independent retailers. Some large apparel manufacturers have retail operations.
    • Large companies include TJX Companies (TJ Maxx, Marshalls), The Gap, Victoria's Secret & Co., American Eagle Outfitters, and Ross.
                              Industry Forecast
                              Clothing Stores Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Feb 12, 2024 - Employment Costs, Consumer Spending Up
                              • Employment levels for the clothing store industry rose in November 2023, up slightly from a year ago but nearly 14% less than in 2019. Employment costs have climbed significantly in recent years, with wages remaining over $19 an hour for much of 2023 and increasing 24% since November 2019. Producer prices dipped to a low midyear before climbing for much of the second half of 2023. Consumer spending levels grew in the last half of 2023, a 3.1% increase in the third quarter and 2.8% in the fourth quarter, according to Reuters.
                              • Consumer confidence levels rose in January 2024 for the third month in a row, following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index increased to 114.8 in January 2024 from 108 in December 2023. According to Dana Peterson, Chief Economist at The Conference Board, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.” Peterson added that the gains in consumer confidence were largest in householders aged over 55. Plans to purchase homes, autos, and large appliances declined slightly on a monthly and six-month basis.
                              • A new report from Mastercard in RIS News shows that clothing and restaurants fared well during the 2023 holiday season. The apparel sector grew 2.4%, and restaurants were up 7.8% year over year during the shopping period from Nov. 1 through Dec. 24, 2023. Overall retail sales (excluding automotive) grew 3.1% year over year during the holiday season, failing to reach the 3.7% growth predicted by Mastercard in September. The results were lower than last year’s holiday sales, which posted 7.6% growth over the previous year. The report showed online retail sales growth of 6.3% during the 2023 holiday season, higher than the in-store sales growth of 2.2%. Even so, the percentage of consumers shopping in-store continues to account for a larger portion of total retail spending.
                              • A recent report from the National Retail Federation and Appriss Retail shows returns for the retail industry reached $743 billion in merchandise in 2023, according to Chain Store Age. The rate in 2023 was 14.5%, down from the 16.5% in 2022 and 16.6% in 2021. The average retailer faces $145 million in merchandise returns for every $1 billion in sales. Online sales have a higher return rate; 17.6% of merchandise purchased online is returned compared to 10% for pure brick-and-mortar returns. Over 15% of holiday gifts are expected to be returned, totaling some $148 billion. Fraudulent returns account for 16.5% of total holiday returns. Types of return fraud in 2023 included returns of used, non-defective merchandise (49%), the return of shoplifted or stolen goods (44%), returns of goods purchased on fraudulent or stolen tender (37%), and return fraud from organized retail crime organizations (20%).
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